State tax refund and AMT

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Joined: Mon Apr 15, 2019 5:39 pm

State tax refund and AMT

Post by StayTheCourse19 » Mon Apr 15, 2019 5:45 pm

Newbie here. While preparing 2018 taxes using TurboTax, I ran into this unique situation. Due to ROC (Return of Capital) event for a stock I owned, I had to amend 2016 taxes in 2018 and got CA state tax refund (approx $400) in 2018. I added this refund to 2018 federal tax income section although I didn't receive 1099-G from the state. I had paid AMT (approx $8k) in the year 2016, is this state tax refund subject to recovery exclusion? I was able to get recovery exclusion from AMT for 2017 CA state tax refund, but not clear how to do the same for 2016 state tax refund received in 2018.

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Joined: Mon Jan 10, 2011 2:26 pm

Re: State tax refund and AMT

Post by ofckrupke » Mon Apr 15, 2019 6:15 pm

Same principle applies.
If you can show that:
had your 2016 federal deduction for state income taxes paid (post-amendment) been reduced by the amount(s) of state refund(s) received in 2018 (and 2017 if any), your summed regular federal plus AMT liability for 2016 would be no different from the summed liability as shown in your amended 2016 return;
then, you have demonstrated that you did not benefit from the combination of 2016 overpayment and later recovery(ies), and therefore the recovery(ies) is(are) excluded at schedule 1 line 10 for 2018 (and if applicable, form 1040 line 10 for 2017).

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